How to Calculate Late Payment Interest for Multiple Invoices?

[mike1227]

Hi,

I understand the concept of invoicing a client for interest on late payments, but can anyone tell me how it works when there are multiple invoices unpaid?

For example, 2 invoices late - both invoices are for the amount of £1000. Can the flat compensation charge (£70) be claimed twice, once per invoice, or does the charge apply only once to the total amount owed (£2000)?

Thanks,
Mike.

[ratewhore]

The legislation allows you to treat them separately. Whether you do or not depends on the nature of the relationship you have with the late payer and whether you want that relationship to continue...

[blacjac]

A handy calculator:

http://www.payontime.co.uk/calculator/statutory.html

Just input the details of each invoice in turn, and it will tell you are entitled to charge according to the late payment legislation.

[mike1227]

blacjac,

This calculator doesn't mention anything about the compensation charge (£70 in my case)?

Mike.

[blacjac]

That;s because it's an interest calculator .

What I do is send an invoice with 2 lines, one with the admin charge and one with the interest.

[NotAllThere]

Admin charge, at the appropriate rate for each individual invoice.

[VectraMan]

Does anyone know how the VAT works?

I found something saying you should calculate the debt from the gross amount, but you shouldn't add VAT onto the late payment charge or interest.

Is it VAT exempt (i.e. I charge £70 and add nothing to my VAT return), or is it that the gross has to be £70 (£59.57 + VAT)?

[blacjac]

I believe it to be VAT Exempt, i.e. £70 + £0 VAT